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Mad Money

News/Business. (2013)

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Ackman 30, Icahn 16, Us 9, Cramer 9, Jim 8, Pfizer 6, Weyerhaeuser 5, Chevron 5, Carl 4, U.s. 4, California 4, China 3, Emc 3, Avnet 3, Bet 3, Manila 3, Camden 2, Minnesota 2, Florida 2, Fulton 2,
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  CNBC    Mad Money    News/Business.  (2013)  

    January 26, 2013
    4:00 - 5:00am EST  

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i'm jim cramer and welcome to my world. >> you need to get in the game. >> firms are going to go out of business and he's nuts. they're nuts. they know nothing. i always like to say there's a bull market somewhere. mad money, you can't afford to miss it. hey, i'm cramer. welcome to mad money. welcome to cramerica. other people want to make friends. i'm trying to save you a little money. call me, 1-800-743-cnbc. this is a beautiful, forgiving market that keeps roaring
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higher. >> house of pleasure. >> the dow gained another 73 points. you know i think we are in the midst of another massive revaluation of stocks for people to realize things are better than we thought. however, we're still in the middle of earnings season. that means it's a dangerous time, a time when it's dangerous to shoot first and ask questions later that we have to go over a game plan that i think will allow you to navigate things. before you pull a trigger on the stock, you still have to do the homework.
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i also had to go through thism call. and it was mind boggling. with that in mind, you have to do it. here is the game plan. we hear from caterpillar. we got dealer numberes from this company. they were not good at all. they were distinctly not so hot, reminding me why. we know they had a gigantic acquisition in china. we know estimates are way too high. we even got an upgrade this week that said that. so in this market, that will be how much should we buy? i'm not kidding, how much should we buy on weakness? that is if we get weakness below where caterpillar is already trading. this market loves you. and all great bull markets have that. they all say, well, look, that was bad, but we see a glass half full here. so please pay close attention to
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cat. we're going to gauge the progress as she brings out value, unloads pieces because it was so poorly managed. the other night on jim cramer at twitter, someone asked why they didn't buy yahoo!. that would be a great idea. you have one darn cheap stock and a chief executive who knows how to take on google which apple has to do because she's from google. tuesday, we get the results from emc. okay? they've downgraded hardware stocks ask technology stocks. i'm worried this is going to be disappointing. so i sold emc for my charitable
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trust, got tired of the negativity. but be w air, the analysts who downgraded emc are pretty close to it and are pretty good. ford comes early tuesday morning. we got a downgrade. it always feels like we got a lot of information.
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some things in life are easy and one of them is pfizer. yeah, pfizer. we know pfizer is breaking up and we think that pfizer is breaking out. not like the breakout i'm having right now. too much makeup. i was on all day today because of that ackman thing. i could tell that i was breaking out. it's spinning out its annual health business and i want you in on that deal. so a lot of pfizer action here. i like phase thor the common, i like pfizer the spin-off. take it from me, if that stock comes, buy, buy, buy. after the close tuesday, really tough amazon reports. this stock with the midas touch. it's the anti-apple. it seems no matter what amazon says, everyone laughs it up now. no winkies, no flying monkey owes that call. but only after the stock initially gets hammered. i want you to pull the trigger, not before then. if it takes off, it's going to be too difficult to chase. be aware there is a distinct pattern here on amazon.
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the news comes out, morons sell it because they think it doesn't look good. the stock plummets. they know we go through it, slowly but surely. it's like, yeah, this just coins money, this trade. we're going to bet it's going to do it again. wednesday, we get a major update from boeing. those guys must be just like, wow. i think if it weren't for the dream liner problems, we get have been ahead. i would steer clear particularly because the transportation board said there no easy answers. that plane is not getting off the ground. you need aerospace that bad? go for united technologies.
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dave cody, my next door neighbor, that guy is money. after the close, qualcomm. qualcomm rooney mcfadden, man. this is a company that is uniquely levered and linked to and what we heard is you could argue that the smartphones from become saturated. now they're trading down, not even buying an expensive smartphone. it has to tell us because it's the semi conductor brain for so many of the next generation of smartphones. this is the most important call of the week. and it might be when you can start buying apple if it hasn't bottomed by then. not that i want you in it, but people do keep asking me. and please understand apple is going from growth stock to value
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stock and that's often an ugly journey, okay? thursday is a day made for mad money. we think light nick could strike. fortune and mantowoc all could take action. either for sale as i like to see with dst, merger which i think could happen with the fortune. through a sale as i'd like to and i think mtw should split itself up into two separate companies. food, service, and cranes. remember those ice machines when you go out to -- ice machines, you feel like you're getting something for free. it's really water. we also get results from bemis. its stock symbol is bms, which stands for buy my stock. here's the stock i mentioned earlier this week as part of the
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brand new bull market in packaging of all things. you're going to see i said that. i'm expecting a very good quarter after the close. we get the new one, the ipo, barry plastics. the other packaging bull market player. i think there's a lot to like here too. on the lookout for both of these. if buy my stock goes down ahead of when it reports, buy its stock. all right. now, on friday morning i think you're going to see the contrast between the world's largest oil company, exxon, which has truly become a serial disappointer, and chevron, which has become a company that delivers some true and positive surprises. which is why i even it for my charitable trust p chevron's went up big and exxon's at its high. i want to buy because its stock's actually going to do nothing or going to go down and i want to buy chevron on any weakness which is what actionalertsplus.com my charitable trust is telling people. somehow i don't think it's going to be down big. chevron, boy, i'll tell you, if chevron comes, in it's been a buy almost every single time for the last year. it will be a great opportunity. more importantly, on friday we get the labor department number, the january employment report.
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we need to see if those jobless claims that came out on thursday, the ones on a five-year low, will compute to a terrific monthly employment report. as i said on the "today" show this morning. i think these numbers have all been on the right trajectory and i bet they will continue over time. that said, if there were a reason for this market to take a breather and profit-taking coming in it would be because of this, okay? because of this number. i'm sure there are many funds that will say i'm going to ring the register because this jobs figure is widely anticipated already. that's why the market was up so many days already this year. and there will be another group that says hey, this number is so strong look out, the federal reserve has to raise rates. and i believe they are definitely going to have to sooner rather than later. a lot of people think they're not going to raise rates in 2013. i think that they will. especially if we get a strong number. here's the bottom line. we have been a terrific forgiving bull market. right now we're in bull mode. and there's a lot to pay attention to next week.
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but if anything's going to make this market pull back, it will be next friday's jobs report, whether it's good or bad. so be careful and remember to do your homework before you pull the trigger in the heat of earnings season and use pullbacks, not advances, to do some buying. brett in massachusetts. brett. >> caller: hey, jim, boo-yah. >> boo-yah to you. >> caller: with kimberly clark and procter & gamble posting strong earnings what do you think of church & dwight? >> i didn't like the last church & dwight quarter. i got all bulled up on them, i thought they could do no wrong and church & dwight stadium stumbled. my charitable trust owns procter & gamble and i think it's better. church & dwight is just a couple points off its high. i would not put it -- after that last quarter, i don't want to be in church & dwight. let's go to michael in illinois, please. michael. >> caller: jimmy, quick windy city frigid windy city boo-yah to you. >> it's chilly out there. it's kind of cold here boo-yah. what's up? >> caller: really quick, last -- it's been about five, six months ago i called in and my question
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was on select comfort. scss. and i was currently at that time short, which i'm not currently. i was short the position. and i continued to do so as we speak today. i guess my question is should i continue to hold the position short or should i cover -- >> no, we don't like -- we have said on this show, we're on record with discussing this with nicole erkin, my associate, that -- just yesterday. we are reiterating that these stocks are not to be owned. select comfort should not be owned. i'm on your team on this one. all right. the market has just been completely red hot bulled up lately. that doesn't mean you should skip the homework. there's a lot to pay attention to next week. we can get a pullback either before leading into the jobs number or after. remember, that's the fulcrum thing. if you're doing trading, take it off before the employment number. "mad money" will be right back. coming up, building momentum? weyerhaeuser provided a solid foundation for belief in a housing recovery today after reporting better than expected earnings.
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but the street sent its stock down anyway. is it your opportunity to construct a winning portfolio? cramer frames up what the future could hold with its ceo, fresh off earnings. and later, clash of the titans. missed the sparks fly on cnbc today? >> carl, you want to bid for the company, go ahead and bid for the company. >> you don't have to tell me what i'm free to do. >> two big money managers are clashing over herbalife. cramer's translating all the lingo to let you in on what it all means for them battled stock going forward. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer. #madtweets. send jim an e-mail to madmoney@cnbc.com. or give us a call. at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.
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when a stock has a big run-up into the quarter, then no matter how great the results are the stock's going to get dinged after reports. take weyerhaeuser, the long-time cramer fave lumber company that i consider to be a terrific play on the housing rebound, one of my top ten teams for 2013. where else is the world's largest owner of soft wood timberland? it's the second largest owner of timberland in the u.s. a major pulp and paper business. also got a real estate operation where it develops land and actually builds homes, great homes. here's a company that covers multiple stages of the housing food chain and the company is fabulous. the stock has had a remarkable run, a huge one, up 36% in the last six months, up more than 53% in the last year. that's why we had to ring the register on this one for my chartable trust. it had run too much. even as the trust would be thrilled to buy it back at lower levels. oh, boy, under 30, wow. wa a hot stock this has been. it's why weyerhaeuser went lower today, falling 63 cents or 2% even after it reported just a monster quarter. the company delivered a 6-cent earnings beat on a 20% basis and its revenues delivered a substantial rise, 20.3% year over year. meanwhile weyerhaeuser say they planned for over a million
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housing starts for 2013. that's a 30% increase from last year, something that should be very good for business. has the stock pulled back enough to become viable? let's take a closer look with dan fulton, weyerhaeuser's terrific ceo to learn more about the quarter and you its fantastic prospects. mr. fulton, welcome back to "mad money." >> hi, jim. >> sir, in all the years i've followed this company this is the most bullish i've heard anybody from weyerhaeuser be. you just -- it's going on all cylinders, isn't it? >> well, we're feeling really good about the housing recovery that's under way. it's been a long time coming. >> but it's not just u.s., even, is it? >> no. for us it's not. we're benefiting from the recovery in u.s. housing. but we also export products all over the world. one of the benefits we have is in our timberlands, as you know, jim, we have substantial timberlands on the west coast and that gives us a market to ship logs to asia for japan and china and korea, and for us that gives us just a tremendous advantage off the west coast to be able to take advantage of
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both u.s. housing as well as export markets. >> at the same time the california housing market's come back, is coming back, sixth largest economy in the world, and you guys are in the thick of it, right? with some areas that were very depressed that are now roaring. >> well, we are really encouraged by the turnaround in california. what we reported this morning is that in the fourth quarter or california house sales increased 80% in the quarter. that's been the slowest market to turn around. but as you know, a very big economic engine in this country. and so for us california means not just our own housing start, activity in our housing operation, but also that's the major market for our west coast saw mills and ultimately for the timberlands on the west coast. >> this morning i was on the "today" show and savannah guthrie, she's fabulous, she asked me, jim, all these companies are making a lot of money but are they doing any hiring? i said not that much. what i should have said is you guys in your transcript today
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make it very clear you are actually hiring people right now. >> well, we are. and most of the hiring in our company today is in our wood products manufacturing business. so we are putting people back to work, adding hours and in some cases adding shifts in our mills in order to respond to the increased demand that we're seeing all across the country. and it's quite frankly for us, to put people back to work in the towns in which we operate is something that we're really pleased with. so we're responding to the increased demand. we're staffing up. and it's a good thing because these are folks that are going back to work, producing products that are being used in not just our construction but construction across the country. >> you're out there in seattle but i happen to know that you're from the east. and the beaches you that may have gone to that i grew up going to have a lot of decimated housing. far more than anyone ever talks about. a lot of that is because you can't even get to a lot of it.
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will there be a developing plywood short nj this country because of what's happening right now with the rebuild from hurricane sandy that's going to start in q2? >> well, we had a very strong quarter in oriented strand board as well as lumber. i don't think that was directly tied to hurricane sandy. it takes some time to really be able to respond to a calamity of that nature. but there will be a lot of rebuilding that will take place. we're positioned to take advantage of that. and there will be demand for all of those products. the challenge in every single case will be building that infrastructure back. but that will put some extra pressure on the housing market as well as just the general recovery that we're expecting this year. as we reported this morning, our estimate is that we would see housing starts recover in 2013 to about a million starts. that's a 30% increase off of last year. and in 2012 was up about 30% from 2011.
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so we're starting to see rebuild. but it's still very low levels compared to long-term trend needs for probably a million five to a million seven starts in this country. >> dan, the housing market can be the engine of a serious recovery because of how many people it takes, right? >> well, you have people buying houses, and you know, then they're visiting the repair and remodel stores like home depot and lowe's to outfit their houses. you know, they're spending money on landscaping. they're spending money on furniture. and historically, it's housing that brings the country out of a recession. this time was different. this time housing has lagged in the recovery. but once the housing engine starts going back to work, it's a sign of consumer confidence, and it causes people to feel better about themselves.
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and it's just a terrific engine in getting this economy back going again. >> in 1994 in japan they had a terrible earthquake and they quickly rebuilt and it was a remarkable comeback. this time around if was an earthquake that had nuclear radiation and you had a government that was paralyzed. is it possible that just now the rebuild is beginning from fukushima? >> well, the initial rebuild from fukushima was temporary housing, modular, very little wood frame housing. but the immediate need was for emergency shelter. and the problem with the tsunami was that it hit some rural areas. they had major infrastructure to rebuild. some of those places they probably won't be able to rebuild. but we are starting to see some resurgence in japan. you know, our exports are up not just because of the impact of the earthquake and tsunami but we're starting to see some government stimulus in japan now in order to help pull them out of a recession, and then there's also a new tax change that's being put in place in roughly 2014.
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so there's some additional spending taking place there. but i think that the rebuilding that's taking place today as you comment is very different from what took place after the kobe earthquake. >> i've got to tell you, dan, this is the best i've seen your company. you've got the real estate trust structure. thank you so much. it's perfect. great to see you, sir. >> great to talk to you, jim. thanks. >> my charitable trust sold it. after listening to what i just heard, we shouldn't have sold. this is just a really good stock. wy is really, really right. dan fulton's got it together. stay with wy. stay with cramer. >> coming up, clash of the titans. missed the sparks fly on cnbc today? >> carl, you want to bid for the company, go ahead and bid for the company. >> you don't have to tell me what i'm free to do. >> two big money managers are clashing over herbalife. cramer's translating all the lingo to let you know what it all means for this embattled stock going forward.
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all right. you may have seen one of the most amazing television interchanges in history, not just business television but all television. on cnbc today. allow billionaires carl icahn and bill ackman to explain to you at home why the other guy's a son of a gun who's not worthy of your respect. refereed by scott wapner occurred on a lot of levels. a lot of it was about a deal going awry a couple years ago that kind ltd the exchange. some thought it was a grudge match with ackman questioning the value of icahn's handshake, icahn implying that ackman was a total cry baby. but the ostensible fight, the reason it played out on air was that ackman wanted to explain again why herbalife, hlf, the company-s a pyramid scheme and while he was at it he blasted icahn, who reportedly owns the stock, as someone who is not a stand-up guy p icahn then called in to defend himself because he was incensed by ackman's description of him. he then called ackman a liar. now, while icahn didn't per se address the fundamentals of herbalife the company, which i wish he had, he did make it clear that ackman could be in trouble because herbalife the stock could be the mother of all short squeezes.
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>> you've got 20%, and if there's ever a short squeeze, which there well might be in herbalife, what the hell does he do? i'd like him to answer, where does he get the stock when they call back all the stock? >> legitimate question. and then he made a brutal accusation. he said that ackman got short and loud at the end of the year and drove the stock down with a presentation to enhance his returns for his hedge fund. >> i'm not going to the s.e.c. or the ftc, where i believe he goes out and he has 300 people in a room, this is the typical ackman. i wouldn't care if it was anybody else but ackman. but he goes into this room and he gets 300 people and he tells them how bad this company is. it's a classic stuff they did in the '90s. you scare the hell out of people, get the stock down. he marks the stock on december 31st and makes 600 million bucks on paper.
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>> ooh, man, get the lawyers in here. throughout the interview scott tried to get icahn to talk about herbalife the company. icahn accused scott of bullying him. that was weird. ackman then appeared to charge that ackman was trying to do nothing but foment a short squeeze to destroy ackman's firm. >> herbalife's going to try to attack my integrity. carl can try to orchestrate a short squeeze. he can do whatever he wants. okay? he can try to scare my investors from investing with me, which it sounds like he's attempting to do on this call. >> i don't want to get between these two men, and you shouldn't either. herbalife the too hard to trade or own right now because it's all about these egos going at it. even as ackman may have done the best work on the fundamentals. i'll give him that. that's where i can help. i want to deconstruct the fight to show you how either man can either win, not in the court of opinion from today's battle but in the battle that is herbalife. first ackman's saying herbalife's going to zero. >> but frankly if they got out at a price higher than zero they're going to be ultimately better off. >> if herbalife goes to zero, he will make all the money between where he shorted the stock and zero. that would be a huge win for his investors.
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we know he has done a gigantic amount of work, well laid out, about how herbalife is a dishonest pyramid scheme. here's the problem. to get the stock to zero ackman needs the government to intervene on his side and prosecute herbalife to wipe it out. without the government's help, meaning the justice department or state attorney general, this company will not go to zero on its own volition. it makes too much money and people keep signing up to be distributors to sell the product, which is its core -- at its core is a product sell. okay? it sells supplements. icahn on the other hand, or whoever owns the stock, can win several ways. first, herbalife can take the money it makes and buy back its own stock, making it more difficult to borrow. why does that matter? okay. when you buy a stock, you get the shares from someone, right? you don't care who gives it to you. when you guy buy it, who cares? you just know when you buy it you're going to get the stock delivered and it's going to hit your account. if the seller owns the stock it's easy enough. the broker takes care of that transaction and takes the stock from the seller, gives it to the buyer. but if the seller doesn't own it, meaning the seller's a short seller, he has to borrow the
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stock to give it to the buyer. the borrower determines why this might not be a fair fight. if herbalife buys in a huge number of shares then there might not be a enough stock left in the float for ackman to deliver to the buyers. if that happens the broker doing the trade just buys the stock in the open market and then gives it to the short seller to deliver it to the buyer, like it or not. the trade is closed out. so if the short seller, let's say he's short the stock at 40 and the broker can't locate any stock to borrow to give to the new owner he might just go ahead and pay any price the market will bear and close out the short seller's trade and that is a wipeout. that's what ackman said icahn might be trying to cause. icahn in return suggested instead of herbalife being wiped out ackman could be wiped out because there might be a takeover that could occur. >> you know, wall street, everybody calls back for a stock you borrowed. and if that ever does it that stock could rush to 100, what the hell does ackman do? >> true. if that happens to herbalife, which is at 44, gets a bid say at 60, ackman owes the difference between what he
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shorted the stock at and 60. icahn's implying that difference could wipe out ak mans firm because ackman is so short so many shares. how about the fundamentals of the company? are they just an afterthought? yes. last week herbalife reported a better than expected quarter but it did not jump. also talked about a buyback starting this week p also has not impacted the stock at all. it's down a little from right before preannounce to the up side. that's proof if you ask me that this situation's no longer about the fundamentals and can't be gained where you can make money at home. when you get good news like that and nothing happens that means something else is at work, perhaps something else ackman has up his sleeve. i don't know. nor do i think you can profit off this moment of bad blood between billionaires because someone truly does have to do a tender offer to get herbalife up big enough to break ackman, something that ackman gave icahn his blessing to do and it didn't make icahn all too happy. >> number one, carl's free to make a tender offer for the company. and carl, you want to bid for the company, go ahead and bid for the company.
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>> hey, you don't have to tell me what i'm free to do. >> okay. number one. number two, obviously we don't think there's going to be a tender offer for the company. we don't think this company is buyable. okay? we don't think any person's going to write a check for 5 or 6 billion dollars to buy a business that we believe is fraudulent. >> wow. for all their bluster, though, perhaps here's the real takeaway. ackman can have as many slide shows and facts he likes about how herbalife is a pyramid scheme yet until a government agency indicts the company and a judge rules to shut it down i don't think this company is going to do poorly enough to get to zero on its own. but unless the company begins to buy back the stock much more aggressively than it start earlier this week there isn't going to be a short squeeze to break ackman either. there isn't enough buying pressure and i'm told right now there is plenty of stock to borrow, there is no short squeeze on the horizon. so ackman wins big on indictment and icahn if he's long the stock wins big on a short squeeze that is clearly not yet happening. here's the bottom line. the way you win big is by staying on the sidelines, sitting back and enjoying the fight, as i know i did when ackman and icahn squared off in one of the great tv moments of a lifetime. let's go to leon in florida,
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please. leon. >> caller: hi, jim. how are you? i'm calling about a company that recently acquired lifegen technologies. the company is nu skin, nus. >> this is a very tough one. sometimes you just have to understand the exigencies of tv. there's an article about nu skin in the post. i'm going to admit something. that's best handled in print. it takes too long to go into the nu skin situation. i'd have to do a whole segment. i don't understand. i'm sorry. team ackman, team icahn, it doesn't matter. the best thing you can do is sit back and watch the brawl. on "mad money" we avoid the battleground shots. let wall street's hot shots throw some punches. just enjoy wapner. enjoy good tv. stay with cramer.
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it is time. it's time for the "lightning round" on cramer's "mad money." rapid-fire calls one after the
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other. you say the name of the stock i tell you whether to buy buy buy or sell sell. my staff prepares the graphics on the fly play until you hear this sound and then -- are you ready, skee-daddy? time for the "lightning round" on cramer's "mad money." mike in new york. mike. >> caller: hello, dr. jim cramer. synovus. can you tell me about it? >> yes. i thought the quarter wasn't that bad. they're returning the t.a.r.p. money. the street didn't like it. street long. i am a buyer of synovus. let's go to todd in florida. todd. >> caller: jim, i love accenture, acm -- >> you're right to love it. >> buy buy buy! >> people decided the quarter was better than expected even though it wasn't. that stock goes higher as does asap. ricky in california. rick. >> caller: ba-ba-ba-boo-yah, jimmy. >> nice stuttering boo-yah. >> caller: high sierra. >> lot of oil there. >> caller: my stock is -- >> i think the yield curve's going to be favorable to them. let's go to paul in colorado. paul. >> caller: boo-yah, national oil -- >> people think the national oil is going to have a bad quarter next week. scuttlebutt. if that is the case -- >> buy buy buy!
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>> because this company is the best rigged technology in the world i like it. let's go to richard in north carolina. >> caller: camden cpq. >> we looked at this camden and we did like it. self-managed real estate investment trust. higher yield if i can get one. greg in ohio. >> caller: how are you doing, jim? >> real good. how about you, greg? >> caller: real good. thanks for taking my call from ohio. just curious. i own b.a.c. -- >> b.a.c.'s fine. a lot of people ask me about that one on the street these days, i say listen, it's fine. i happen to like other banks better. i like wells better. i like bank of america. i need to go to dave in minnesota. >> caller: how are you doing? >> real good, dave. how about you? >> caller: i'm doing good. my dad is jim kellogg and he start the restaurant business in austin, minnesota in 1954. he was 16. he's always invested in hormel. now my son, who's also jim kellogg, is 16 and started to do
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the same. what are your thoughts on hormel, jim? >> oh, man, i think that acquisition they just made is so good. >> buy buy buy! >> i know it's spiked, but i pushed it very hard on the acquisition. i pushed it before the acquisition. and i'm pushing it right here. i think it goes higher. and that, ladies and gentlemen, is the conclusion of the lightning round! >> the lightning round is sponsored by t.d.ameritrade.
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now that apple's become a stock leper even as i actually think it's worth buying at these levels because it's a value name apple's products face real competition. maybe it's time to turn our attention to the company behind the touchscreens in all non-apple devices. cypress semi. the stock has basically been cut in half. it has a number of business lines. he this make what are known as programmable systems on a chip which are small low power semiconductors used in mobile phones and tablets. also chips that power touch-screens, a super fast growing business even as they don't sell anything to apple. they have controller chips that help smartphones communicate with computers more directly and they're also the number one manufacturer of a more expensive type of memory chip called sram, static random access memory. not really a growth business but a cash cow. i do this to give you some work on this and understand it.
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the company's been struggle with a weak market for semiconductors. just jed cypress reported slightly better than expected results and this is after they preannounced the down side. more important cypress expects the current semiconductor slump will bottom in the first quarter. where we are right now. and after that there will be real revenue growth in this business, something that could drive the stock higher. that said, this company was pretty positive about a turn much earlier. that turned out to be premature. the difference is cypress is a single-digit stock trading a little below ten bucks a share and at this level it sports a bountiful 4.4% yield, k paid handsomely to wait for the turn. plus the global economy looking a whole lot better than last year at this time. positive things from avnet, world's biggest supermarket from tech including semi-conductors. let's check in with t.j. rodgers, the co-founder and ceo of cypress semiconductor, find out more about the quarter and where his company's headed. t.j., welcome back to the show. >> thank you. >> first, i'm trying to figure out because i followed your company for years, what is so -- what has changed in the world in
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semiconductors in particular where a rick hamada from avnet can come on three months ago and tell us really bad and come on yesterday and things look really great. you're a seasoned practitioner. last year you booked a bill and it was really good and then it got tough again. this is a different time. why? >> you just said it's a highly volatile market, and it really is. and the thing that changes it is the big market for chips nowadays is not companies like ibm, for example, it's companies like samsung and cell phone makers. and when bad times hit the cell phones shut down and all of a sudden we used to ship 10 million units a quarter and we ship none. it's the whim of the consumer, not the whim. what the consumers do based on the economy feeds right on back to you very quickly. and you can't predict it. we don't know when the economy's going up or down, and we're the tail on the dog. we really get whipped around. >> what worries me here is -- couple worries.
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one, i always thought you ran a lean company. always. i've been proud of it in lean. then it turns out you're saying you've got a lot of fat and you're going to get rid of a lot of people. which is it? >> we've always been lean, and we're lean now. we are making some cuts that we have to make that are structural that we're getting rid of a division and we're basically loading the work of that division onto the other three division managers. but we're all going to work more hours. we weren't fat. i'm not going to say we're fat. but obviously, if we can make cuts, the question is validly stated. so why didn't you make them before? and i'll fess up. we could have. >> let's talk about the cash position because i know you're a conservative man and you've often criticized governments who spend too much. but here you're very proud. you mentioned in your conference call you've got the lowest level of diluted shares in over seven years, pretty happy to see that. you've been buying back stock. at the same time cash and investments fourth quarter 117 million, 102 million in acquisition.
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are you spending too much buying your stock back and spending too much on your dividend? >> that's a fair question. dividends we're going to keep paying because we think investors expect that. you know, you could say that as opposed to doing the acquisition we did with cash we could have done it with stock and then we'd have more stock and less cash. well, another way to look at that transaction is we in effect brought back our own stock last quarter and we felt it was cheaper for us to borrow money than to buy back our stock because we think our stock's undervalued. and you're right. we pushed it. we've got debt now. we never had debt for years. but right now i'd rather have fewer shares of stock and some debt because i see a better future for us than the bottom, which i think we're in right now. >> okay. but that said, brad bus, real smart guy, cfo, he's talking about how look, in the end the macro is always the macro, it's a huge variable for us. you can do a lot at your company
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to do the right thing. but if the macro goes wrong for you, then aren't you taking too big a risk this time around? >> you absolutely can say that. and we are tail on the dog argument again. we are in a market. but you know, we're at a bottom -- if we're not at the bottom we're near the bottom. like what's gone wrong's gone wrong. the stock's been cut in half. our business has gone down from 250 or 260 million dollars a quarter down to $180 million a quarter. so there's more up side today than down side. also, the company has value. we've got the lowest number of shares. and if the bet works wrong, we'll sell some shares to the public. we can always raise money. i've done three offerings of $600 million each. the last offering i did took us two days to raise 600 million. so if we have to sell stock to bail -- to pay off debt, we'll do it. right now we think buying the stock and having the debt is the right thing to do.
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>> last question, you do spend some time in the conference call really basically talking about the last man standing and that you intend to be that last man standing in any sort of price war. you're an american company. we have very high costs in this country. we've got a government that doesn't really appreciate business. we've got employment concerns in this country that makes it so you can't even fire people the way you might like to. why are you confident that you can be the last man standing when there are other countries on earth where they don't really have any rules about what they do to employees? >> that's a good question. the particular business we're talking about being last man standing and we will be was the touchscreen business, and it turns out we make the majority of our touchscreen controllers in china in one of the lowest-cost manufacturing operations in the world. in cypress's own assembly and test plant, which is about half the cost of a product when we ship it is in manila, and we've been in manila for almost 20 years. and we have fully automated
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robotic lines in manila. so we enjoy asian manufacturing costs in that market. what's here in silicon valley is what belongs here. the brain trust, the designers. in effect, it's like being an investment banks. you've got to be in wall street. but you'd be crazy to have your accountants driving in to manhattan to do the accounting for you. they've got to be in a lower cost area. >> you tell a straight story, t.j. and you've always been real up front with us and i wish you the best of luck. if you hit a bottom here the stock's going to be springloaded. t.j. rodgers, president and ceo of cypress semiconductor. >> thank you. >> guys, look, good yield, but cash being burned down. bought back a lot of stock. usually terrific news but if the macro goes bad it's going to be difficult. this company's had a series of moves at times that were so breathtaking that maybe this is the call option on the world and the world of semiconductors. "mad money's" back after this.
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we used to joke on the trading desk about how quickly the lapdog analysts would come out and say the weakness is a buying opportunity on every single stock that went down. they would then pound the table to get people to purchase shares no matter how horrible the earnings trend discussion was that dropped the stock. we used to say here comes the b.o. with the obvious implication that buying opportunity stunk out loud. but in this market, a market where forgiveness reigns supreme, weakness, even justifiable weakness is often a great buying opportunity. i'm not being facetious. think back a month ago when schlumberger announced a weaker corner because of pricing pressure in north america. actionalertsplus.com. when i sat down with
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co-portfolio manager stephanie link to talk about that shortfall she immediately bet me ten bucks the stock would not only be above the $68 level where it fell to immediately after preannounce but above the $73 mark where schlumberger was when the company announced the shortfall. schlumberger today traded up to $79. lost that bet. i guess i've got to pay her the ten bucks. accenture at one time my favorite consulting company recently reported earnings and gave an outlook that chilled me. simply inconceivable a company of that consistent caliber could blow up the way it did. i felt so terrible -- i said wow, how lucky i am, i dodged a bullet because i was going to tell people to buy the stock. i did on the game plan but i didn't do it thank you for -- i didn't buy it for my charitable trust. but holy cow it went right from 71 to 65. it was just hideous. today accenture took out the level where it was before the hideous shortfall. is it any wonder that fellow consultant s.a.p. which also acknowledged weakness on its conference call is back to where
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it was before it did that? this is incredible, people. this pattern has repeated itself so often it's now become engrained. starbucks, the worst number from europe as the culprit. howard schultz, a phenomenal ceo, then comes on "squawk on the street" and pledges a fixture and the turnout is at hand. the stock reacts poorly to what he says and heads down to 49. then what happens? schultz delivers on his promise last night and starbucks heads right to $56 today. procter & gamble's bob mcdonald has a couple disappointing quarters and put him right on the wall of shame, then promises those days are over, take him off the wall of shame, and he's going to deliver increased revenues and much lower costs. very few believed him. we did. today he does it. procter soars to 73 bucks. incredible. to me what people don't realize is what the environment's just plain gotten better. think about the guests i had on the show last night, rick hamada the ceo of avnet. when his company reported he had
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very little good to say. rick came on the show and said that business was fundamentally sound and his company came in and was buying stock hand over fist after being out of the market when the stock was higher because it was now such a terrific opportunity in the high 20s. sure enough the report yesterday and it was terrific and yes the stock's down 35 and change. well above where it was before the previous shortfall. the moral of these stories this market forgives, forgets, and then goes higher. which is why most of the weakness you see in individual stocks are indeed b.o., buying opportunities. and boy, this b.o. smells good.
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